I. Introduction

In the Philippines, 13th month pay is a statutory benefit that most private-sector employees look forward to toward the end of the year. But what if you resign early in the year or after only a few months of service—are you still entitled to it?

This article explains, in detail and in Philippine legal context, how 13th month pay works when an employee resigns, including those who worked only for a short period (a few weeks or months) within the calendar year.

II. Legal Basis of 13th Month Pay

The primary legal basis is:

Presidential Decree No. 851 (PD 851) – the “13th Month Pay Law,” which mandates payment of 13th month pay to certain employees.
Subsequent issuances (Presidential/Administrative Orders, DOLE guidelines) have expanded coverage and clarified exemptions and computation.
The Labor Code and DOLE regulations provide the general framework on wage benefits, money claims, and enforcement.

In essence, the law requires most employers in the private sector to pay 13th month pay to rank-and-file employees who have worked at least one month within the calendar year.

III. Who Is Entitled to 13th Month Pay?

1. Basic Coverage

As a rule, all rank-and-file employees in the private sector are entitled to 13th month pay if they:

Are rank-and-file (not managerial) in status; and
Have worked at least one (1) month during the calendar year for the employer.

“Rank-and-file” generally means employees who do not perform managerial functions such as hiring, firing, laying down company policies, or effectively recommending such actions.

2. Employers Covered

Covered employers typically include:

Private corporations
Partnerships and sole proprietorships
Non-profit, charitable, or religious entities engaged in business or employing workers

Government agencies and government-owned or -controlled corporations are generally not covered by PD 851, as they have their own year-end benefits under separate laws and budget rules.

3. Minimum Length of Service

The key minimum requirement is:

The employee must have worked at least one (1) month in the calendar year.

If an employee worked less than one month total within that calendar year for that employer, there is no entitlement under the minimum standard of the law.

IV. General Rule on Resignation and 13th Month Pay

1. Resigned Employees Are Still Entitled (If Qualified)

As a general rule:

An employee who resigns before December remains entitled to proportionate (pro-rated) 13th month pay, as long as the basic legal conditions are met:

Rank-and-file status

Worked at least one month during the year

The benefit does not depend on being employed on December 24 or December 31. What matters is the total basic salary earned during the calendar year up to the date of separation.

2. Effect of Short-Term Resignation

If you resign after a short period, like 1–3 months:

If your total service for the year is at least one month, you are generally entitled to pro-rated 13th month pay based on what you earned.
If your total service is less than one month, you are generally not entitled to 13th month pay for that employer for that year.

3. Timing of Payment

For employees who remain employed, the 13th month pay must normally be given on or before December 24 of each year.

For resigned or separated employees, the pro-rated 13th month pay is commonly:

Paid together with the final pay/clearance, or
Given on the regular 13th month payout date, depending on company policy—as long as the payment is not later than the statutory deadline for the year.

V. Special Focus: Short-Term Resignation Scenarios

Below are common short-term situations and their treatment.

1. Resignation After One Month of Work

Scenario: You were hired on January 1, resigned effective February 1.

Total service: 1 month
As long as you are rank-and-file and received basic salary, you are legally entitled to a pro-rated 13th month pay.
Computation: Total basic salary from January 1 to February 1, divided by 12.

2. Resignation After Three Months (Probationary or Regular)

Scenario: Hired as probationary employee on January 1; you resign effective March 31.

Length of service: 3 months
Probationary status does not disqualify you from 13th month pay. The law covers rank-and-file regardless of probationary or regular.
You are entitled to pro-rated 13th month based on your basic salary from January to March.

3. Resignation While Still Probationary (Before Regularization)

Probationary employees have the same right as regular employees if they meet the minimum one-month service. There is no requirement that you must be regularized.

4. Project or Fixed-Term Employees

If a project-based or fixed-term employee is rank-and-file and has rendered at least one month of service within the year, they are also generally entitled to pro-rated 13th month pay, unless they fall under specific exceptions.
If the project lasts less than one month for the entire year, the employee generally does not qualify.

5. Seasonal Employees

Seasonal workers (e.g., peak season staff) are often repeatedly hired for certain months of the year. If during a given year they:

Worked at least one month; and
Received basic wage as rank-and-file;

they are typically entitled to 13th month pay computed on the basic salary earned during those working months, divided by 12.

6. Resignation Before Completing a “Required” Company Service Length

Some employers tell employees they must complete, say, “at least 1 year” or “be employed on December 24” to receive 13th month pay. As to the statutory minimum:

These conditions cannot legally deprive an otherwise qualified employee of 13th month pay mandated by law.
An employer may set stricter internal conditions for extra bonuses (like a 14th month or additional Christmas bonus), but not for the basic 13th month required by PD 851.

VI. Other Modes of Separation vs. Resignation

For completeness, similar rules apply when employment ends for these reasons:

Termination for Just Cause
- Even if an employee is dismissed for just cause (e.g., serious misconduct), they are still entitled to benefits already earned, which include pro-rated 13th month pay up to the last day worked.
Termination for Authorized Causes (redundancy, retrenchment, closure, etc.)
- Employees typically receive separation pay, and pro-rated 13th month pay remains due based on their earned basic salary for the year.
Retirement
- Retiring employees are likewise entitled to pro-rated 13th month pay, separate from retirement pay.
Death of the Employee
- The 13th month pay accrued up to the employee’s last day of work should form part of the employee’s final pay, which goes to their heirs/estate.

VII. How 13th Month Pay Is Computed

1. General Formula

The standard formula:

13th Month Pay = (Total Basic Salary Earned During the Calendar Year ÷ 12)

For resigned employees, you use:

Pro-Rated 13th Month Pay = (Total Basic Salary Earned from January 1 up to Date of Separation ÷ 12)

It doesn’t matter if you were active only part of the year; computation is based on what you actually earned as basic salary during the period.

2. What Counts as “Basic Salary”

Generally included:

Monthly basic wage
Any part of salary which is contractually treated as basic (e.g., integrated allowances that form part of basic pay)

Generally excluded from the computation:

Overtime pay
Premium pay (e.g., rest day/holiday premium)
Night shift differential
Cost-of-living allowances (COLA), if not integrated into basic salary
Profit-sharing
Cash bonuses that are purely discretionary
Unused leave credits converted to cash
Other monetary benefits that are not part of the basic salary

3. Employees with Absences, No-Work-No-Pay Days, or Unpaid Leaves

If you have unpaid absences (no work, no pay) or periods with no salary, they simply reduce the total basic salary you earned for the year. This naturally results in a lower 13th month pay, but you remain entitled as long as:

You worked at least one month; and
You earned some basic salary in that period.

4. Example Computations

Example 1 – Resigned After 3 Months

Basic salary: ₱20,000 per month
Worked January, February, March (3 full months), then resigned end of March

Total basic salary (Jan–Mar): ₱20,000 × 3 = ₱60,000

Pro-rated 13th month pay: ₱60,000 ÷ 12 = ₱5,000

Example 2 – Worked 1.5 Months Only

Daily rate or partial month: total basic salary earned = ₱15,000 for entire service
Total basic salary: ₱15,000

Pro-rated 13th month pay: ₱15,000 ÷ 12 ≈ ₱1,250

Example 3 – Less than One Month of Service

Hired December 1, resigned December 20, with daily pay that totals ₱10,000
Total service: less than one month

Legally, the threshold is “at least one month” of work in the calendar year. If total service is below this, the employee is usually not entitled under the minimum standard of PD 851 (unless company policy voluntarily grants it).

VIII. Commission-Based, Piece-Rate, and Similar Arrangements

1. Employees with Basic Salary Plus Commission

If an employee:

Receives a fixed or guaranteed basic wage, and
Also receives commissions,

the basic wage part is counted for 13th month computation. Commissions may or may not be included, depending on whether they are considered part of “basic salary” under jurisprudence and company policy.

2. Purely Commission-Based or Task-Based Workers

Certain workers who are purely commission-based (no fixed basic wage), or paid per output (piece-rate), have been treated differently in some cases:

If what they receive is not “wage” for time worked but purely dependent on sales or output, they may fall outside the coverage, depending on specific circumstances and legal interpretations.
However, if in substance they receive something that functions as basic wage, they might still be covered.

In practice, this can be a technical legal issue, and affected workers often need specific legal advice based on their contract and actual payment scheme.

IX. Tax Treatment of 13th Month Pay

Under Philippine tax law (as amended by later tax reforms):

The 13th month pay and other benefits up to a certain total ceiling per year (e.g., ₱90,000 under the TRAIN Law) are tax-exempt.
Any amount exceeding that threshold, when added to other covered benefits, becomes subject to income tax and withholding tax.

For a resigned employee with short-term service, the pro-rated 13th month pay is often far below the exemption ceiling, so it is usually non-taxable, but actual tax impact will depend on the total benefits and income for the year.

X. Company Policies vs. Legal Minimum

Employers may grant benefits better than the law, such as:

14th month pay
Mid-year bonuses
Higher formulas for 13th month (e.g., using gross earnings instead of basic salary only)
13th month pay for employees with less than one month of service

Key points:

The law sets the minimum. Companies may improve but cannot reduce or remove the statutory 13th month pay for qualified employees.
If a company repeatedly gives a benefit over and above the law over a long period, it may become a company practice and may no longer be easily withdrawn.

XI. Quitclaims, Waivers, and Final Pay

When employees resign, employers often require:

Clearance
Quitclaims/waivers in exchange for payment of final pay and benefits

Important notes:

You cannot validly waive statutory benefits (like the minimum 13th month pay) that have already accrued and have not been paid in full. Any waiver that results in you receiving less than what the law requires may be invalid as to the deficiency.
This means:
- Even if a resigned employee signs a quitclaim and later discovers that the 13th month pay was not paid or was underpaid, they may still have the right to claim the deficiency.

XII. Remedies If 13th Month Pay Is Not Given

If a resigned employee believes they did not receive their correct 13th month pay:

Internal Inquiry and HR/Payroll Request
- Ask for a breakdown of final pay, including how 13th month pay was computed.
- Sometimes it is mixed in with other items and not separately labeled.
Request for Correction
- If there appears to be an error, make a written request for correction and keep a copy.
Labor Department Assistance
- If the employer refuses or there is a dispute, the employee may seek help from the Department of Labor and Employment (DOLE) (e.g., through conciliation or Single-Entry Approach mechanisms).
Filing a Case for Money Claims
- Monetary claims for unpaid benefits, including 13th month pay, are subject to a prescriptive period (generally three (3) years from when the cause of action accrued).
- If necessary, the employee may file a case (e.g., with the National Labor Relations Commission) within that prescriptive period.

XIII. Frequently Asked Questions on Short-Term Resignation

1. “I resigned after 3 months. My employer says only those still employed in December get 13th month pay. Is that correct?”

As a general legal rule, no. The law provides that rank-and-file employees who have worked at least one month in a year are entitled to 13th month pay based on their total basic salary earned for that year, regardless of whether they are still employed in December. You should receive a pro-rated 13th month pay upon resignation or by the statutory deadline.

2. “I resigned after 2 weeks. Do I get 13th month pay?”

If your total service for the year with that employer is less than one month, then under the minimum requirement (“at least one month of service”), you’re generally not entitled to 13th month pay. However, some employers may still voluntarily grant it as an extra benefit.

3. “I was still probationary when I resigned. Am I entitled?”

Yes, probationary employees who are rank-and-file and have worked at least one month in the calendar year are entitled to pro-rated 13th month pay, computed on their basic salary earned during that period.

4. “I was terminated for just cause. Do I still get 13th month pay?”

Yes, in general you are still entitled to earned benefits, which include the 13th month pay corresponding to the period you actually worked in the year, unless you fall under specific legal exemptions. Termination for just cause removes the right to separation pay, but not to benefits already earned.

5. “I am paid purely on commission. Do I have 13th month pay?”

It depends:

If you have no fixed basic salary and are paid purely on commission or per output, you may not be covered under PD 851 as interpreted in some cases.
If, however, you do receive something that functions as a basic wage, you may still be entitled.
This is a more technical issue and is best clarified with specific legal advice based on your actual contract and pay structure.

XIV. Key Takeaways

Resignation—whether short-term or not—does not automatically forfeit your 13th month pay.
The key criteria are:
- You are rank-and-file; and
- You have worked at least one month in the calendar year; and
- You received basic salary in that period.
Your 13th month pay is pro-rated based on the total basic salary you earned from January 1 up to your date of separation, divided by 12.
Company policies may improve on the law, but they cannot go below the minimum statutory requirement.
If unpaid or underpaid, you generally have three years to pursue money claims, and you may seek assistance from DOLE or appropriate labor tribunals.

Disclaimer: This article provides a general legal overview based on Philippine law and typical regulatory interpretations. It is not a substitute for personalized legal advice. For specific situations or disputes, consulting a Philippine labor lawyer or seeking assistance from DOLE is strongly recommended.